Is It Better to Buy as Owner, Occupier or Inventor for Your First Home

There are several situations in which you might buy a home, but the two most common are as a potential owner-occupier and as an investor.

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Is It Better to Buy as Owner Occupier or Investor for Your First Home?

There are several situations in which you might buy a home, but the two most common are as a potential owner-occupier and as an investor. For someone who has never owned property before, a common question is whether it makes sense to continue renting as a tenant when you can afford to buy a home or whether that first purchase should be yours to occupy.

Let’s take a closer look at the financial impact of both decisions and which might make the most sense for your particular situation.

Gauging the Cost of Where You Live

At this point, you can afford to buy your first property. This is an exciting moment, but it is also a potential cause of stress because you’re probably unsure what makes the most sense. Buy and occupy or buy in an affordable area as an investment. After all, a home you are willing to live in will likely cost a bit more and may not have as much upside in the long term.

There are three things to keep in mind when the time comes to make this decision:

  • Potential Capital Growth in Your Home – While it’s easy to make an emotional decision when buying a home in which you will live, always keep the capital growth potential in mind. A large percentage of your net worth is being invested into the property. That investment should be kept safe and ideally grow over time.
  • Timeline for Occupying a Home – Are you ready to occupy a home. If you are still unmarried and have no children, it may not make logistical sense to own a home yet. Why not build wealth through investment and continue to rent in the short term, near your place of employment?
  • Potential Investor Income from A Property – A positively geared investment property will generate income on a regular basis. If you are not yet ready to own a home, this income can be saved and used toward a second property purchase in the future. Why not use your first investment to finance your second?

One last factor to consider is the stamp duty concessions that may exist depending on your location. When you are a first time homebuyer, purchasing a property as your primary residence, these concessions can be a big swing that might affect not only the cost of the investment but your decision about whether to live in the home or not.

Making the Right Investment Choice for You

Ultimately, the decision is going to come down to what is best for you both financially and logistically. From your current assets to your family status and employment, almost every factor of your life will determine when it makes the most sense to invest vs. buy that first home.

For those on the line, the factors above may play a role, but spend some time evaluating what works best for your lifestyle. Don’t overcommit too early if you are not yet ready to own and occupy.